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bb133eleftProtecting the Environmentalists – a change in the legal climate
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bb133eleftBattle of the covenants – implications of Personnel Hygiene Services Ltd v Mitchell 2009
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bb133eleftWe're all off to sunny Spain... Pereda v Madrid Movilidad SA (ECJ) [2009]
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Need to Know: HR Law Update
Welcome to the November 2009 edition of Need to Know. This month we look at the Employment Appeal Tribunal decision which confirms that the Disability Discrimination Act does cover associative discrimination.
We also look at further problems faced by employers in the ongoing battle of sick leave vs. annual leave, why motive is irrelevant in cases of race discrimination and the philosophical beliefs protected by employment legislation.
Finally we consider a Court of Appeal case on the relationship between competing restrictive covenants contained within different types of employment documentation.
Please contact a member of the employment team if you have any queries in relation to the issues set out below or any other employment-related query.
Protecting the Environmentalists – a change in the legal climate
Motive irrelevant when decision based on race
Associative Discrimination falls within European Equal Treatment Directive
Battle of the covenants – implications of Personnel Hygiene Services Ltd v Mitchell 2009
We're all off to sunny Spain... Pereda v Madrid Movilidad SA (ECJ) [2009]
Protecting the Environmentalists – a change in the legal climate
The cause of environmentalism and the green agenda was given a legal boost recently in the Employment Appeal Tribunal (EAT) case of Nicholson v Grainger plc. Although an employment law case, Nicholson may also have wider implications for environmental issues, as the facts of the case suggest.
The EAT upheld the Employment Tribunal's original decision that beliefs in environmentalism and climate change can constitute a "philosophical belief". The decision will potentially force employers to take environmental issues and the green agenda, including the actual and practical implementation of those issues and agenda, very seriously.
The Law
The Employment Equality (Religion or Belief) Regulations 2003 (the Regulations) were introduced primarily to prohibit discrimination on the grounds of an individual's religion, religious belief or philosophical belief.
This case has come as a shock because it is the first time it has been accepted that a philosophical belief entirely unrelated to religion or religious belief can be protected under the Regulations (i.e., in exactly the same way as Islam or Christianity).
The Facts
Nicholson was made redundant by Grainger plc (Grainger) in July 2008. Nicholson claimed that the real reason for his dismissal was not redundancy but his philosophical belief in environmentalism, evidenced by his determination to implement and stick to a "green" agenda at Grainger.
Nicholson joined Grainger, a residential property investment company, in 2006. He joined as a development surveyor, but later changed role to Head of Sustainability. Nicholson claimed that, during his employment, he discovered that Grainger's widely promoted environmental and corporate social responsibility policies were not put in place and Grainger's practices were in fact anything but "green".
It is alleged that when Nicholson tried genuinely to implement carbon-friendly and green policies at Grainger, he found himself completely at odds with other senior executives in Grainger and, Nicholson alleged, he was dismissed as a result.
The Case
At a preliminary hearing back in April, the Employment Tribunal found in favour of Nicholson. They concluded that beliefs in environmentalism and climate change could constitute a "philosophical belief" under the Regulations. The EAT upheld this decision with one small exception, being that the Tribunal had wrongly held that Nicholson could not be cross-examined on his belief.
The EAT held that to establish a religious belief, the claimant may only need to show that he is an adherent to a particular religion, but to establish a philosophical belief, cross-examination is likely to be needed.
The EAT went on to provide some much needed guidance and limitation of the application of the Regulations to establish a philosophical belief:
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The belief must be genuinely held.
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It must be a belief and not an opinion or viewpoint based on the present state of information available.
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It must be a belief as to a weighty and substantial aspect of human life and behaviour.
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It must attain a certain level of cogency, seriousness, cohesion and importance.
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It must be worthy of respect in a democratic society, be not incompatible with human dignity and not conflict with the fundamental rights of others.
The EAT made three further important points:
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Notwithstanding the amendment to remove "similar" from the Regulations, it is necessary, in order for the belief to be protected, for it to have a similar status or cogency to a religious belief.
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A belief, even if religious, is not required to be one shared by others.
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If a person can establish that he holds a philosophical belief which is based on science, as opposed, for example, to religion, then there is no reason to disqualify it from protection by the Regulations (the EAT used Darwinism as an example).
The EAT's decision has provided much needed guidance (not least to Nicholson) on the application and scope of the Regulations. However the question of whether Grainger's actions did in fact amount to unlawful discrimination against Nicholson, on account of his philosophical belief, is still to be decided.
Motive irrelevant when decision based on race
There was a note of warning from the Employment Appeal Tribunal (EAT) in the recent case of Amnesty International v Ahmed: to the effect that employers cannot escape liability for claims of direct race discrimination simply because their actions were based on good intentions. An employer can still discriminate, even when its motives are good and honourable.
The facts in this case involved Miss Ahmed, a woman of Northern Sudanese ethnic origin who worked for Amnesty International (Amnesty) from 2005 as a campaigner on issues relating to Sudan, particularly the crisis in Darfur. Miss Ahmed applied for a promotion in 2007 for the post of Sudan researcher, which she was already carrying out on a temporary basis. Despite being the recruiting panel's favoured candidate, senior managers within Amnesty thought otherwise and raised concerns about:
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her impartiality; and
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the increased safety risk to her and her team due to her ethnic origin (the latter was because they considered that she was more likely to be targeted).
Miss Ahmed was therefore turned down for the role of Sudan researcher but encouraged to apply for other similar posts. She resigned and brought claims of race discrimination and constructive dismissal, amongst others.
The Employment Tribunal found that Miss Ahmed had been directly discriminated against on racial grounds. Direct discrimination under the Race Relations Act 1976 (the Act) provides that a person discriminates against another if he treats that person less favourably on racial grounds, which includes ethnic origin. Simply put, Miss Ahmed was not given the role of Sudan researcher because of her Sudanese ethnic origin.
In its defence, Amnesty argued that it was acting in Miss Ahmed's best interests. If it had sent Miss Ahmed to Sudan, it would have breached its duty as her employer to ensure her health and safety at work. Amnesty relied on section 41(1) of the Act which exempts certain discriminatory acts done under statutory authority. The Tribunal rejected this argument. Amnesty appealed to the EAT.
The EAT confirmed that the correct question in cases of direct discrimination is what is the ground, or the reason, for the treatment complained of? Not the motive behind it.
In this case, the reason for the discriminatory treatment was Miss Ahmed's ethnic origin.
Turning to Amnesty's defence, the EAT decided that even if there was an unacceptable risk to Miss Ahmed's safety, there were more reasonable ways to protect her such as not sending her to Eastern Chad, or Sudan, until it was safe. The EAT held that the safety difficulties were not insurmountable and rejected Amnesty's submission that the job could not be done without visiting the areas of conflict.
Interestingly, whilst the EAT held that Amnesty had directly discriminated against Miss Ahmed, this did not mean that trust and confidence was necessarily undermined. The EAT could not find that Amnesty had acted in a manner calculated or likely to destroy/seriously damage trust and confidence; the EAT took into consideration that Miss Ahmed had been encouraged to apply for other similar posts having been rejected for the post of Sudan researcher. Miss Ahmed's claim for constructive dismissal was therefore dismissed.
So good motives will never get you off the hook for discrimination, but they may help on the issue of repudiatory breach.
Associative Discrimination falls within European Equal Treatment Directive – Implications of EBR Attridge Law LLP (formerly Attridge Law (a firm) and Another v Coleman
The Employment Appeal Tribunal (EAT) gave judgment on 5 November 2009 that the carer of a disabled son, who was not herself disabled, was entitled to bring a claim of disability discrimination against her employers on the ground of her son's disability.
Mrs Coleman was employed by a firm of solicitors. She was the carer of a severely disabled son and brought a claim against her former employers alleging that she had been treated less favourably because of her son's disability. Mrs Coleman complained that her former employer refused to allow her to return to her existing job following maternity leave, failed to give her the same amount of flexibility as staff with non-disabled children, disciplined her, and dealt with her grievances inadequately.
Mrs Coleman also argued that she was criticised for taking time off work, and was accused of using her son's disability to her own advantage, which created a hostile working environment.
The Employment Tribunal, without making any findings of fact, referred the case to the European Court of Justice to consider whether discrimination by association with a disabled person - in this case Mrs Coleman's son - was unlawful under the Equal Treatment Framework Directive (the Directive). If the Directive prohibited "associative discrimination", a Tribunal would need to interpret the Disability Discrimination Act 1995 (DDA) to give effect to the purpose of the Directive and Mrs Coleman could proceed with her claim.
The European Court of Justice, following the earlier opinion of the Advocate-General in July 2008, concluded that associative discrimination did fall within the terms of the Directive.
The Employment Tribunal followed the ECJ's judgment and ruled in Mrs Coleman's favour. Her employers appealed that decision to the EAT.
The President of the EAT, Justice Nicholas Underhill, found that the DDA could be interpreted so as to apply to such associative discrimination as a matter of domestic law because the objects of the Directive required a broad approach.
The EAT said section 3A of the Disability Discrimination Act should be amended to include the following wording "A person also directly discriminates against a person if he treats him less favourably than he treats or would treat another person by reason of the disability of another person".
Mrs Coleman's claim will now be remitted to the Employment Tribunal to consider the merits of the substantive claim.
There are at least two action points which arise from this case:
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Equal Opportunities Policies should be reviewed expressly to refer to discrimination by association;
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Particular care should be taken when handling flexible working requests from carers of elderly or disabled people. When refusing a request, employers need to ensure that they have not treated the employee less favourably than someone whose circumstances are not materially different (such as requesting flexibility for child care).
Battle of the covenants – implications of Personnel Hygiene Services Ltd v Mitchell 2009
The Court of Appeal recently considered the relationship between different types of employment and related documents and, specifically, different types of restrictive covenants.
Mr Mitchell (M) was employed by Rent a Crate Ltd (R), as a senior executive under a service agreement which contained restrictive covenants. M was also a shareholder in R's parent company.
M, together with other colleagues, decided to sell his shares to Personnel Hygiene Services Ltd (P). The details of the sale were set out in a share purchase agreement (SPA) which also contained restrictive covenants applicable to the sellers, including M. M's employment terminated 6 weeks after the sale of shares and he entered into a compromise agreement with R and P.
The compromise agreement contained yet further restrictive covenants. It also contained and an "entire agreement" clause to the effect that the compromise agreement superseded all other previous agreements and comprised the entire agreement between the parties.
Following the termination of his employment M attempted to set up a business which, in the view of P, was competitive and in breach of his covenants. Attempts to reach a negotiated outcome having failed, P applied for an interim injunction to enforce the restrictive covenants in the SPA.
All the covenants were aimed at preventing M from competing with R and the new owners, P, for a certain period of time. The covenants in the compromise agreement were of greater duration than those in the service agreement and of less duration than those contained in the SPA.
The High Court, looking at three sets of restrictive covenants, decided that the covenants in the compromise agreement replaced those in the SPA. P appealed to the Court of Appeal.
The sole issue was whether the High Court judge had been right to conclude that the restrictive covenants in the compromise agreement superseded those in the SPA. The Court of Appeal found that the compromise agreement was intended to replace the covenants in the service agreement only. The compromise agreement expressly referred to the service agreement and the restrictions in the compromise agreement covered the same points.
The Court found it was hard to argue that the entire agreement in the compromise agreement resulted in the covenants in the SPA being superseded, particularly as a number of other aspects of the SPA agreement would continue in existence notwithstanding the existence and enforcement of the compromise agreement. The two had to co-exist. The "entire agreement" clause in the compromise agreement did not include the SPA.
When dealing with a senior executive severance, it is imperative that all the relevant documentation (such as documentation dealing with shares) is reviewed to ensure that a compromise agreement deals with all aspects of the relationship. Only in this way can the would-be enforcer ensure the requisite degree of protection from the departing employee. It is by no means certain that the enforcer will always be able to take advantage of the most advantageous restrictions and certainly not every employer will be as fortunate as P.
We're all off to sunny Spain... Pereda v Madrid Movilidad SA (ECJ) [2009]
The European Court of Justice (ECJ) has ruled that an employee who cannnot take holiday as a result of sick leave is entitled to postpone the holiday even if it carries over into the following holiday year. This, in effect, means the UK Working Time Regulations (which prohibit the carry-over of any of the 20 days' 'European' holiday leave) are in breach of EU law.
Mr Pereda's job was to tow away illegally parked cars in Madrid. He had booked a month off work from 16 July 2007 to 14 August 2007 but, on 3 July 2007, he was injured at work and was not able to return to work until 13 August 2007. He did not go on holiday during his sickness absence.
On 19 September 2007, he asked his employer to allocate a new period of one month's leave from 15 November 2007. His employer refused.
The ECJ ruled that the Working Time Directive prevents any country from stopping a worker on sick leave during a period of annual leave taking his annual leave after his recovery (even if that new leave is in the next holiday year). The scheduling of the replacement sick leave is a matter for national law so the UK's requirements for notification and consent are still good law but if the employer cannot accommodate the request in the current holiday year it must be rolled over into the next holiday year.
The "use it or lose it" principle does not apply when employees have been off ill.
But what if an employee breaks a leg on the first day of her holiday? Logically, the requirement to give replacement holiday leave would also apply here, provided he complied with the reporting requirements to enable her to take sick leave.
The fear is that employees with less serious ailments and shorter holidays will be ringing their line managers up before 10:00am from the Costa del Sol to say that they have a bad cold so won't be able to enjoy their holiday and thus want to convert it into sick leave instead. How is this to be proven? We recommend changing policies to require medical evidence suitable for the location where the employee falls ill.
This ECJ case only relates to the four weeks' holiday leave required by the Working Time Directive. It does not (yet) relate to contractual leave in excess of the Working Time Directive minimum.
To discourage abuse of "sickness holiday" we recommend that such sick leave during pre-arranged holiday only be paid at the statutory rate and only after three working days illness.
This may require changes to employees' terms and conditions of employment.
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